By Tony O’Reilly-
BP has officially ousted its former Chief Executive, Bernard Looney, (pictured) with immediate effect, following revelations of “serious misconduct” related to undisclosed past relationships with colleagues.
The oil giant will withhold more than £32 million in pay and share awards from Looney, who stepped down from his position in September after admitting to inadequate disclosure of personal relationships to the board.
BP said the maximum £32.4 million Mr Looney will forfeit primarily consisted of unvested share awards and almost £1 million that he would have to return to the company under a “discretionary clawback”.
Eighty-seven per cent of the total had been “automatically forfeited” when Mr Looney resigned, BP said, but 10 per cent was related to the board’s decision that his misconduct was serious enough to justify firing him, while 3 per cent was being clawed back at the board’s discretion.
BP said the clawback of awards given to Mr Looney covered the period from July 2022 when the company said he had given “misleading assurances” to the board that he had disclosed all past relationships with employees.
The board received a first set of allegations about Mr Looney’s conduct in May 2022, after which he acknowledged four past relationships with colleagues and assured the board in writing he had nothing further to disclose, the Financial Times has reported.
The most recent allegations were made in September by a female BP whistleblower and identified further relationships that Looney had not previously disclosed.
BP said the clawback reflected “the decision by the board that Mr Looney should not retain any variable pay relating to service following the date of the misleading assurances”.
A spokesperson for Mr Looney did not immediately respond to a request for comment. – Copyright The Financial Times Limited 2023
After an extensive investigation by the board and its advisers, BP concluded that Looney knowingly misled fellow directors when they sought assurances about his disclosure of past relationships and future conduct.
Describing Looney’s actions as “serious misconduct,” the company decided to terminate his contract without notice.
The financial consequences for Looney are substantial, with a total forfeiture of £32,426,000.
Nearly £25 million of unvested stock is tied to performance share awards, while over £4.5 million relates to salary, pension allowance, and the maximum bonus award for the remaining notice period.
Unvested stock is stock set aside for an employee but that he/she has not yet fully owned due to the fact that certain conditions (e.g. performance targets or length of employment) haven’t been met yet in a vesting period.
A vesting period is a process of gaining 100% ownership of an equity asset.
BP clarified that 87% of the total value was automatically forfeited when Looney resigned in September.
The board’s decision to dismiss him after serious misconduct led to an additional 10% loss, and a further 3% was clawed back at the board’s discretion.
Bernard Looney, a BP veteran since 1991, witnessed his pay package more than double to £10 million in 2022. This included a salary of £1.4 million, a bonus of £2.4 million, and a £6 million share award, along with benefits.
His departure signifies a significant end to a career that saw him rise through the ranks, culminating in his role as CEO from 2020.
Looney’s tenure at the helm was marked by a commitment to reshape BP’s strategy, aiming to reduce oil and gas production and transform the company into a net-zero energy entity by 2050. The controversy surrounding his exit has raised questions about BP’s future trajectory.
The search for Looney’s successor, initiated by BP Chair Helge Lund, is underway.
Lund expressed the company’s openness to consider external candidates, a departure from BP’s traditional practice of promoting from within.